If the present value annuity factor at 10 percent for 10 years is 6.1446, what is the equivalent future value annuity factor?
A)3.1080
B)15.9375
C)2.5937
D)8.4132

Question

Quizplus · Accepted Answer

The present value annuity factor (PVAF) is the factor used to calculate the present value of an annuity. The future value annuity factor (FVAF) is the factor used to calculate the future value of an annuity.

FVAF = (1 + r)^(n-1) * PVAF

In this case, r (the interest rate) is 10% and n (the number of years) is also 10.

FVAF = (1 + 0.10)^(10-1) * 6.1446
FVAF = 15.9375

Therefore, the equivalent future value annuity factor is 15.9375, which corresponds to Choice B.

If the Present Value Annuity Factor at 10 Percent for 10